Imagine that I were to propose, or some politician were to propose, or some group of politicians were to propose, or some publication were to propose exempting those age 40 and younger from New York’s state and local income taxes, while charging senior citizens the highest taxes in the country. There would be outrage at seniors receiving such a raw deal. There would be questions of fairness. The discussion and attention to the issue would be massive.
In reality, however, what is proposed and enacted over and over again in New York is the opposite: special deals for today’s seniors to the detriment of younger people, in the highest taxed state in the U.S. The latest example of this is the tax changes proposed by the Republicans in the New York State Senate. The pension income of public employees is fully exempt from all New York State and New York City income taxes, no matter how high that income is, and no matter how young the retired public employee is. As a matter of “fairness,” the State Senate Republicans now propose that ALL seniors be allowed to ripoff younger generations in the same way, by exempting private sector retirement income from taxes as well (the first $20,000 of retirement income is already exempt after age 59 ½; Social Security income is fully exempt for public and private employees).
The State Senate Republicans are concerned, they say, that “New York is Losing People and Income,” but they clearly do not understand which people those are. The state is losing working people and young people everywhere but New York City, where they have yet to catch on to just how abused they are. The old folks like New York just fine, because they are the only ones who matter here. So how does having the retired pay far less in taxes than employed people with the exact same income attract businesses and talented workers? And what would be the spending reduction to go along with the tax reduction?
New York spends more than just about anyone else in certain categories, such as the interest on the debts run up by prior generations, the public employee pension benefits those now retired and soon to retire promised themselves, and Medicaid spending on those age 65 and over. Infrastructure? Won’t be needed once Generation Greed is gone, so the one thing the State Senate certainly wants cut is mass transit. Education? We spend more than anyone, but a hell of a lot of that is for a job and pension program for those with connections, rather than for the kids.
This, you might think, is merely the usual attempt by Republicans from the rest of the state, fast becoming one big retirement home, to cheat New York City, where city residents are forced to pay more in tax and accept less from all the public employees who commute in from the burbs. Are Democrats are the party everyone under 55 should be supporting, to get fairness for anyone but Generation Greed?
I have attached a list of proposed pension-related changes over the last few years.
The name to look for is Peter Abbate of Brooklyn, a man the public employee unions look to for help in their effort to leave the city and state in ruins. With the demography of Abbate’s district changing, he clearly doesn’t care about the ordinary people there now, or the people who will live there 10 years from now, if he ever did to begin with.
Abbate proposes, over and over again, that retirement income not count as income for purposes of determining if someone is eligible for the “enhanced STAR” property tax breaks for senior citizens. So you could have a couple of retired public employees with $250,000 of combined pension, Social Security, 401K and other income. But only that other income would count, so they would have a total income of less than $81,900, and thus be eligible for the added property tax break for “poor” seniors. There is no proposed deal to exempt work income from the calculation of eligibility for property tax breaks. Those people have to pay up.
How can this be justified? Perhaps the argument is once again “fairness.” Since retired public employees are not required to pay state and local income taxes, it isn’t fair that they are required to pay property taxes! And what about people working their ass off and paying high property taxes, directly or as a part of their rent? Those people do not count as such in New York State. They are revenue sources and suckers.
It isn’t that seniors are overtaxed now. As I have shown repeatedly, in New York City a couple of retired public employees would pay vastly less in federal, state and local taxes than a young working couple with the exact same income. Seniors are poor? If they were actually poor, then they would not owe state and local income taxes, and would quality for enhanced STAR, because their income was low. Rather than requiring a special deal that allows their high incomes to not count for purposes of taxation, so they could pretend they were poor. If all my family’s work income did not count as income for purposes of taxes, we could claim we were poor and entitled to lower taxes too.
Now when I bring that Abbate deal up to people with a public employee union background, their response is that proposals like that are “just a game” and will “never happen.” The Senate Republicans might say the same thing about their proposal. Just a way to get a few more votes from the seniors by forcing the Democrats to say no. They’d never do it in reality.
Or would they?
At the national level, after 30 years of selling the country’s future to benefit the most affluent members of the most affluent generations in U.S. history, those far better off than those who came before or after, the national Republicans have realized that everyone under age 40 is dead set against them. They have lost the young, and primarily represent the old. As those to whom they pandered die off, and those whose future they robbed constitute and ever growing share of the electorate, the Republicans have realized that they face oblivion. And they have to do something.
They have hit upon Obamacare as a “generational equity” issue they can spin in their favor. By putting everyone in the individual market (the previously uninsured, and the future uninsured after employers drop coverage) into the new state pools, and by forcing people to buy insurance or pay a penalty, the Republicans claim that Obamacare would force healthy young people — who would be better off skipping insurance — to subsidize increasingly unhealthy middle age people who require lots of health care. Absent Obamacare the young could either take the risk of being uninsured, or purchase very low cost insurance, leaving those in late middle age to fend for themselves.
In general this is nonsense, for a couple of reasons. First, young people are already massively taxed to pay for older people through Medicare, Medicaid for seniors and the tax break for employer-financed health insurance. But with regard to publicly financed health care for themselves, they generally got nothing until Obamacare came along. And as a result of future selling by the Republicans, today’s young are unlikely to get the same senior benefits when they get old themselves, as the Republicans readily admit.
When the national Republicans controlled the Presidency, the House and the U.S. Senate, they pushed through a massive increase in Medicare spending for today’s seniors, and did nothing for young workers who were uninsured while paying taxes for older people’s health care. A year or two later, those same Republicans were citing rising federal health care spending and deficits, as a result of their tax and spending policies, as a reason they would have to drastically cut future Medicare benefits for those age 54 and younger. Thus spitting in the face of everyone age 54 and younger on behalf of those older, Generation Greed.
Second, under Obamacare states can allow health insurance premiums to vary with age, with those oldest beneficiaries permitted to be charged up to three (3.0) times the premiums of young adults. Now the handiest data on health care spending by age I have readily available as I write this is Medicaid spending per beneficiary by age in 2007. At the time, New York State’s Medicaid average spending per beneficiary age 45 to 64 ($14,601) was 3.8 times the average for those age 19 or 20 ($3,855), the age group with the lowest per person spending. The ratio was 3.7 times in the U.S. and 3.1 times in the other states adjacent to New York.
So at the 3 to 1 ratio for health insurance premiums permitted under Obamacare, the young would subsidize those in late middle age, but only slightly. Add in the fact that younger people generally have lower incomes, and increasingly low incomes compared with the incomes received by today’s old when they were young themselves, and the fact that those with lower incomes are entitled to subsidies under Obamacare, and the Republican argument that health care reform is disadvantageous to the young does not hold water.
Except in New York State.
New York, according to an article that I read recently, is one of only two states that requires health insurance companies to charge the same premiums to younger people as it does to people in late middle age, as part of the Obamacare health insurance exchange. Rather than the 3 to 1 ratio that is permitted under the law, or some other number in between. The other state is Vermont which had a universal health insurance program prior to the advent of Obamacare, and doesn’t’ really count.
One can argue which policy is fair. After all, if the Obamacare system survives today’s young would end up on the other end of the subsidy when they reach late middle age themselves. Or one can argue that this policy is unfair.
But the point is, does anyone recall the thoughtful debate that occurred when New York State made this decision? The discussions around fairness, equity, needs, incentives, and the viability of the health care system going forward? The newspaper articles, opinion pieces and discussions in the New York Times, the Daily News, the New York Post, the Albany Times Union, on National Public Radio, or on television?
We’ve got lots of talking heads on radio news call-in shows, and quite a few screaming heads. Did any of them raise this as an issue? Were any of them even aware of it? If I were on the radio it would have come up. Perhaps someone should hire me. I’d call it the “Generation Greed” show. I know the perfect station for it. WOR, now that they have the Mets. I’d shake up those “Rambling with Gambling” listeners, that’s for sure.
The decision to be the only state that hits younger people the hardest in the individual insurance market under Obamacare was just another middle of the night deal favoring Generation Greed. The proposed deals slashing the property taxes of affluent retirees relative to less affluent workers, and the state and local income taxes of affluent private retirees relative to less affluent workers, are similarly just waiting for the right 3 am. Younger generations may be leaving most of the state because they feel that, adding it up, they are screwed, and that’s just fine with the New York politicians and special interests that screw them, as long as no one tells them how and by whom they are screwed. So the pols can point fingers in a circle, and Generation Greed does not feel guilty.
And on it goes. I recently read that Rockland County is going bankrupt, like Nassau County. So Governor Cuomo agreed that it could borrow $96 billion to pay for today’s expenses, forcing future generations of county residents to pay for them instead. “Rockland has the worst credit rating and second highest per-capita debt in the state.”
Wait a minute. Rockland County? A county with a per capita income of $56,230 in 2012 compared with $53,241 for all of New York State and $43,735 for the whole U.S.? A county with a median household income of $82,677, in 2012, compared with $56,448 for all of New York State, and $51,321 for the U.S.? That Rockland County?
How does this happen? Why does it always happen in New York State? Just for the heck of it, I checked out the official state population projections by age. It seems that back in 1990, just 10.1% of the residents of Rockland County were age 65 or over, compared with 13.1% for New York State as a whole. But by 2015, Rockland’s seniors are expected to account for 14.5% of its people compared with 14.6% statewide. The overall Rockland County population has increased quite a bit since 1990, but the population age 65-plus has nearly doubled. That’s a lot of entitled people. Who is going to pay for them? They have never wanted to pay themselves. I’ll bet that has something to do with the mess the county is in. It is hard to come up with another explanation.